GameStops short interest reaches new heights Could this be the next major squeeze

Despite the prevailing negative sentiment surrounding GameStop (NYSE: GME) stock in the short term, it continues to attract the market’s attention due to recent short-squeeze activity. According to data shared by Unusual Whales in a post on June 9, the reported short volume as of June 7, 2024, has surged to 103,785,384 shares, surpassing the figure from January 22, 2021, which was 97,123,046 shares.

The increase in short interest indicates that many investors are betting on a drop in GameStop’s stock price despite the potential for another squeeze driven by retail traders. The high level of short interest creates a delicate situation, where any positive news or coordinated buying efforts could lead to a rapid surge in price as short sellers scramble to cover their positions to avoid losses.

While retail investors are captivated by the meme stock, GameStop’s financial performance tells a different story. The company reported a loss of $32.3 million on revenue of $882 million for its fiscal first quarter, ending in June, a decrease from the previous year’s loss of $50.5 million on revenue of $1.2 billion. The decline was attributed to falling sales of hardware, software, and collectibles.

In response to market volatility, GameStop has announced plans to stabilize its finances and support future initiatives. The retailer intends to sell 75 million shares of common stock, with the proceeds earmarked for general corporate purposes, including potential acquisitions and investments. This comes after a successful sale of 45 million shares from its May 17 offering, generating $933.4 million in gross proceeds.

The resurgence of interest in GameStop has been fueled by Keith Gill, also known as “Roaring Kitty,” who recently made his first YouTube livestream in over three years. Gill, a significant figure in the meme-stock frenzy of 2020 and 2021, has historically influenced investor sentiment through his engaging content. His recent online activity has already caused significant fluctuations in GameStop’s stock price, with a surge of up to 47% on June 6.

With the continued volatility surrounding GameStop stock and the impact of current short interest levels, especially with influential figures like Gill making a comeback, market observers are closely monitoring the situation. At the time of writing, GME was trading at $28.22, having corrected nearly 40% in 24 hours. Despite this correction, the stock has shown a bullish trend year-to-date, rallying about 70%.

Disclaimer: The content presented here should not be construed as investment advice. Investing carries risks, and your capital is at risk when investing.